Abstract
We evaluate the impact of three proposed regulations of transportation network companies (TNCs) like Uber, Lyft and Didi: (1) A minimum wage for drivers, (2) a cap on the number of drivers or vehicles, and (3) a per-trip congestion tax. The impact is assessed using a queuing theoretic equilibrium model which incorporates the stochastic dynamics of the app-based ride-hailing matching platform, the ride prices and driver wages established by the platform, and the incentives of passengers and drivers. We show that a floor placed under driver earnings can push the ride-hailing platform to hire more drivers and offer more rides, at the same time that passengers enjoy faster rides and lower total cost, while platform rents are reduced. Contrary to standard competitive labor market theory, enforcing a minimum wage for drivers benefits both drivers and passengers, and promotes the efficiency of the entire system. This surprising outcome holds for almost all model parameters, and it occurs because the wage floor curbs TNC labor market power. In contrast to a wage floor, imposing a cap on the number of vehicles hurts drivers, because the platform reaps all the benefits of limiting supply. The congestion tax has the expected impact: fares increase, wages and platform revenue decrease. We also construct variants of the model to briefly discuss platform subsidy, platform competition, and autonomous vehicles.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
